Google plans to test search and shopping ads in AI Overviews in the near future.

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Google is set to introduce search and shopping ads in AI Overviews, according to an announcement made during Alphabet’s Q2 earnings call. The senior vice president and chief business officer of Alphabet, Philipp Schindler, confirmed that the ads would appear within the AI Overviews section and would be clearly labeled as sponsored. While the exact timeline for the rollout remains uncertain, Schindler stated that testing would begin “soon.”

The introduction of ads in AI Overviews has been highly anticipated by advertisers, who have been relying on search ads for lead generation and revenue for many years. This new format presents an opportunity for brands to explore a different avenue for reaching their target audience. Advertisers will closely monitor the impact of these ads on their return on investment (ROI) as they represent an unproven format.

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Despite the lack of specific details, Google has shared positive trends associated with AI Overviews. The company reported an increase in engagement from younger users aged 18 to 24 when using Search with AI Overviews. However, when pressed for more information on these positive trends, Google CEO Sundar Pichai kept his response vague, simply stating that all feedback received has been positive.

It is worth noting that the launch of AI Overviews encountered some challenges, which likely contributed to a more cautious approach. The initial release of AI Overviews provided users with bizarre and potentially dangerous answers to queries, such as suggesting drinking urine to pass kidney stones. As a result, Google had to scale back the feature.

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The earnings call also highlighted Google’s commitment to improving the quality of AI Overviews. Pichai mentioned significant investments made in increasing the core model size while reducing latency and maintaining a flat cost per AI Overview served. Google aims to match the appropriate model size to the complexity of each query to minimize cost and latency.

In terms of financial performance, Alphabet reported a 14% year-on-year growth in Google Search and other advertising revenues, amounting to $48.5 billion. The growth was primarily driven by the retail and financial services sectors. YouTube ads revenues also saw an increase of 13% year-on-year, with brand advertising leading the way.

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Overall, the introduction of search and shopping ads in AI Overviews presents a new opportunity for advertisers to reach their target audience. As Google continues to refine the feature and improve its quality, advertisers will closely monitor the impact on ROI. With positive trends emerging from AI Overviews and continued revenue growth for Google, it is clear that the company is committed to innovation and providing valuable options for businesses and users alike.

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